Intel Stock Dives 8% Amid Foundry Exit Risk

According to reports, Intel shares fell 8% last Friday after new CEO Lip-Bu Tan issued a stark warning: if the company fails to secure major clients for its chip foundry services, it may exit the manufacturing business altogether.

In a bold shift from past strategies, Tan is cutting costs by reducing Intel's workforce, halting factory construction projects in Europe, and slowing development at its Ohio facility. This marks a departure from former leadership's heavy investment in large-scale fabs to regain manufacturing leadership.

Intel's financial woes were further highlighted by a surprise adjusted loss in Q2, with the company forecasting even deeper losses in Q3. Years of mismanagement have eroded Intel's position in both the PC and data center markets—while rivals gained traction in AI, Intel has struggled to gain a foothold.

Industry analysts are raising alarms. TD Cowen's Joshua Buchalter notes that this development reopens critical questions about Intel's foundry strategy and its long-term competitiveness if it fails to achieve leading-edge manufacturing.

As part of the new direction, Tan stated that Intel may reserve its advanced 18A (1.8nm) process for internal use only, unless key external customers commit. The next-generation 14A (1.4nm) process will move forward only with confirmed demand, signaling a cautious approach to capital-intensive R&D.

This pivot places nearly $100 billion in assets at risk and could deepen Intel's reliance on rivals like TSMC—putting further pressure on already shrinking margins.

“If Intel's 18A process doesn't deliver, the story breaks apart,” said Hendi Susanto, portfolio manager at Gabelli Funds.

Intel's stock is trailing its peers, rising only 12.8% year-to-date compared to Nvidia's 30% and AMD's 34%. With a market cap of around $100 billion—less than half of AMD's—the pressure is mounting. Intel now trades at a forward P/E of 42.55, well above Nvidia's 33.90 and AMD's 32.12.

Since taking the reins in March, Tan has moved quickly—cutting divisions, downsizing, and reallocating resources—in an aggressive bid to reset Intel's course and revive its relevance in a rapidly evolving chip landscape.